Oil will trade at $5 per barrel before it trades at $250 per barrel by the year 2050. Discuss.

https://issuu.com/instituteoftrading/docs/mentoring_florida_scholarship

$2999 is the price to change someone’s life? And here I am with hacksaw job, hacksaw wife and hacksaw cats when I could have changed everything with a small non refundable deposit.

I used to go well above 3000 words at school for a lousy B in return.

$5 seems pretty pessimistic. Even if we become 100% solar powered, we’d still need plastics for a long time coming. Add in likely inflation and $250 seems more reachable than $5.

I think those guys just want to see if you can come up with some unlikely scenario that other people have overlooked. The only real scenario that I can think of with $5 oil is that the US hugely outperforms the rest of the world, current account balance is reversed, and the dollar appreciates 400%. On top of that, we have built huge renewable energy and battery grids that power all the cities. Furthermore, Russia and major OPEC countries must have diversified away from oil; otherwise, they will be in economic turmoil and oil will become harder to buy on the market, driving up prices from $5.

$250 oil is possible if the US experiences huge inflation as a results of large deficits, and if WW3 breaks out in the Middle East.

yeah, are we really comparing a 95% decline to a 400% rise? not a very linear comparison.

i’ll entertain it anyway. considering KSA is the only country that could probably produce below US$5/bbl and they only amount to a maximum of 11% of current production, $5/bbl is impossible. it is already a highly automated process so further cost cutting is likely to do little. plus, with transportation costs included, i doubt KSA can get a barrel to cushing for less than US$10, may be even US$15.

Good point about the lower limit being the cost of production. Although if oil turns out to be completely unnecessary for anything at all, I suppose no one would produce it and existing stocks would suddenly be worthless, so there is a scenario where it could go below that. All of those scenarios seem to be pretty extreme though, and much less extreme than what would be required to get to $250 (of which the most likely scenario is inflation)

Yes, because all the As were reserved for the students who succinctly explained things in 500 words or less

i can’t even imagine a world where we can replace jet fuel or diesel in entirety. i’m pretty sure it is impossible to create a renewable engine that can propel a 747 plane or a 797 truck in an efficient way. the plane weighs 280 tons and has to leave the ground, the truck weighs 400 tons. i’m not physicist but i don’t think a battery can efficiently move these vehicles. maybe compact nuclear power. further, if we replace ashphalt in its entirety, what do we replace it with? much more energy intense concrete?

the only way for oil to hit US$5 is if its use is made illegal by governments.

I don’t think you can get oil out of the ground for that cheap, much less ship it. I’ll take $250.

You guys are not answering the question. The guy wants to know what edge case scenario you can think of that could possibly result in oil trading at that range. Just for arguments sake.

I didn’t see a question. Just a statement and then “Discuss”.

Too much supply coming online at once due to a measurement error, cheating, lack of reporting, etc. Or demand dramatically shifts. Or even worse, like China has been just buying oil and storing it somewhere and decides to start selling it! Demand contraction and supply expansion in one single fraud!

Seems like these are the type of events that could bring it to $5, because the cost to produce may not be meaningful in the short-run if you have too much already produced.

…or a near extinction event. if there’s only say 1 million people alive one day, the price of oil would be zero for quite a long time. i’ll say that. the absolute bottom in a normal world is $10-$20 due to demand/supply reflexivity while the absolute bottom is $0. there is no chance of the price being $1-$10. we’re either all dead or we’re paying US$10 minimum. and i think to reach US$10 you’d have to have a bunch of countries unloading their SPRs.

I remember someone suggesting that if we blew ourselves back to the stone age (or even early 19th century technology levels), we’d never be able to reproduce the civilization we’ve built on fossil fuels, because we’ve used all the easily accessible oil and to get new oil requires machines that run on fossil fuels. I suspect there are some leaks in that theory but I thought the premise was interesting.

plus alternative energy technology is quite advanced relative to the past. although maybe we could build the same society on natural gas instead which is still quite cheap to produce. just create a massive energy grid capacity and electrify everything. it would probably be much more efficient in the long-run. though like i said before, it’d be tough to achieve efficiencies in heavy load travel and mining without oil so i don’t know what that would mean for those industries, which are fairly integral to the world economy.